Analysis: Toyota investment can lift Tennessee economy

The old slogan Oh, what a feeling would be appropriate for state officials, community as Toyota will be investing more than $1 billion into auto plant that makes the Camry as well as the Lexus ES 350.
Matt Stone/C-J

Tennessee’s economy will get a lift as Toyota Motor Corp. goes through with its plan to upgrade its assembly lines at Georgetown, Kentucky.

The Japanese automaker on Monday detailed a $1.3 billion retooling plan for the massive Georgetown complex, part of the $10 billion capital spending plan Toyota announced in January on its U.S. facilities over the next five years.

It is the largest retooling plan ever announced by the automaker and will have an impact on Tennessee, analysts say, because the state is in between Toyota’s concentration of four assembly lines in the United States.

About 8,000 workers in supply plants throughout Tennessee make parts for Toyota vehicles assembled at Blue Springs, Mississippi; Georgetown; Princeton, Indiana; and San Antonio. The employment numbers were estimated in a 2016 study by the Center for Automotive Research, a think tank near Detroit.

Major automakers typically invest billions of dollars every year on new production equipment, although analysts say Toyota’s project surpasses the typical.

Georgetown will be refitted to handle the Toyota New Global Architecture. This means the assembly lines can be more quickly shifted to produce the stronger-selling models.

“This major overhaul will enable the plant to stay flexible and competitive, further cementing our presence in Kentucky,” says a statement released by Toyota Kentucky President Wil James.

In Tennessee, suppliers are looking for new investment to accommodate the quicker shifts at Georgetown, the largest Toyota facility in the world.

“There are numerous suppliers in Tennessee and West Tennessee, and many hope and expect this will have a positive impact on suppliers in the state,” said Mandy White, senior vice president for economic development at the Jackson Chamber of Commerce in West Tennessee.

With seven Japanese auto parts companies in the area, including TBDN, Toyota Boshuku and UGN, Jackson has emerged as a center for Toyota parts production since 1986, when the automaker opened the Georgetown plant. Toyota purchases all the aluminum blocks for its U.S. engines from Toyota Bodine Aluminum in Jackson.

Toyota's arrival in the United States ushered in a movement by U.S. automakers to duplicate its just-in-time inventory management system, which required suppliers locate within about 400 miles of an assembly plant. This reduced warehousing expenses and moved inventory onto trucks constantly running between the assembly line and the parts plant.

On Monday, President Donald Trump shared the credit in a tweet lauding Toyota’s $1.3 billion retooling decision, although analysts say Toyota was most likely gearing up for the project months ago before Trump as president-elect assailed the company for expanding in Mexico.

Ted Evanoff writes about the automotive industry for USA Today Network-Tennessee. He can be reached at evanoff@commercialappeal.com and (901) 529-2292.